Conn. regulators begin review of massive gas plan

Associated Press

Published 9:09 pm, Tuesday, September 10, 2013

Family-owned heating oil businesses and Connecticut's three regulated utilities squared off Tuesday as the state began a weeklong series of hearings to determine who will pay for an ambitious multimillion-dollar plan to connect about 280,000 new customers to natural gas.

One small business owner told regulators that the joint proposal by Connecticut's "natural gas monopolies" will siphon off customers and have a "grave impact" on her family business.

"Please allow us to continue to compete fairly," said Kate Childs, vice president of Tuxis Ohr's Fuel in Meriden.

Anthony Marone, senior vice president of business services at United Illuminating, said key differences separate the regulated utilities and businesses that operate with no state oversight: "We don't have the flexibility to charge the price we want to cover some of the main aspects that the oil dealers or the gas association or others need to contend with."

Legislators and Gov. Dannel P. Malloy enacted a law earlier this year authorizing the Public Utilities Regulatory Authority to approve a new rate plan to finance the massive 10-year program, which is part of a drive to cut energy costs in Connecticut. Regulators must now determine how the millions of dollars that will be spent to expand the state's natural gas system will be allocated among utility shareholders, ratepayers, and businesses and individuals signing up for the new service.

The proposal comes amid a nationwide boom in natural gas production that has aroused fierce opposition from environmentalists over hydraulic fracturing, or fracking, that's used to draw gas from the ground.

Connecticut Natural Gas, Southern Connecticut Gas and Yankee Gas presented state regulators with a rare joint proposal in June that outlines their plans. Yankee Gas, a subsidiary of Northeast Utilities, said capital spending would be $35 million next year and more than $96 million in 2015 and 2016.

Southern Connecticut Gas said capital spending would be $61 million in the three years while Connecticut Natural Gas expects capital spending of about $47 million in the same period.

The utilities are asking regulators to approve new rates that would spread the cost of hookups over 25 years, eliminate a required contribution toward construction for customers connected to gas lines that are 150 feet or closer to gas mains and make other rate changes to encourage the large-scale switch to natural gas. The companies also spell out to regulators the millions needed in revenue and what they believe the expansion costs will be.

Elin Swanson Katz, the state's consumer counsel, told regulators that consumers will have greater choice, but she asked regulators to set a cap on the cost to consumers. And the state AFL-CIO backs the large-scale shift to natural gas as way to create jobs.

"Propane is a domestically produced gas that comes from the same wells as natural gas, yet no one is trying to incentivize my membership to expand our businesses and take on hundreds of thousands of new customers," he said.

Critics also said utility shareholders, not ratepayers, should bear the brunt of the project's increased costs because they would be the chief beneficiaries.

The utilities say shareholders are already taking on much of the risk and will lose money if the utilities fall short of expansion goals or profitability.

The Public Utilities Regulatory Authority is expected to issue a final decision in November.